Private equity trumps Cosmos bid for Cossette

Duffar has been eyeing a takeover of the company since July but his advances, via investment firm Cosmos, met stiff opposition from Cossette’s board of directors, led by founder and CEO Claude Lessard (pictured), who initiated a search for an alternative bidder.

Lessard and other key senior managers have already committed to vote with their collective 30% shareholding in favour of the new bid from Mill Road Capital. They will remain minority shareholders in the business if the acquisition deal is completed.

Cosmos previously boasted the support of 37% of Cossette shares for its offer of C$5.25 per share – but with Mill Road’s bid priced 50% above that at C$7.87 a share, Cosmos is likely to see much of its backing vanish.

Duffar could come back with a higher offer, which Cossette would be free to consider. Although the company has agreed not to actively solicit competing acquisition proposals, it has the right to look at any rival bids it deems superior and to terminate its agreement with Mill Road Capital if the private equity firm is unable or unwilling to match an increased price.

In a statement Cossette’s board urged shareholders to reject Cosmos’s offer, saying it “significantly undervalues” the company. Lessard said Mill Road’s bid “better reflects Cossette’s true value”.

“Furthermore,” he said, the Mill Road transaction ”is occuring with a strategic partner that has already proven its respect for our organisation, our brand and our people, and it ensures total continuity with our trusted clients who have supported us throughout this process.”

Cossette provides strategic planning and research services through its agencies Nucleus and Impact Research in Canada, Cossette in the US and Miles Calcraft Briginshaw Duffy in the UK.

A special meeting of shareholders has been called for 18 December to discus the Mill Road offer.